The New Thinking in Non-profit Revenue

Editor's Note: This is the second in a seven-part series on how to build your advisory services for non-profit organizations. Here, Altruist Partners'Donald Summers shares eight battled tested practices used by innovative, high performing non-profits.

Is your organization starving financially? You’re not alone. Most small- to mid-sized non-profits have high potential programs, but are in moderate to severe financial distress. The tools and strategies they use haven't changed in decades and they long ago lost their effectiveness.

If you look to ideas like strategic planning, capital campaigns, auctions and appeal letters, your odds of getting off your bread-and-water diet are very low. These tools date from the 1970s, and they were never that great to begin with.

The data proves it's all just not working. How many stories do you hear of non-profits that are growing in leaps and bounds, year over year, using these tools?

The good news is that things are starting to change. There's positively disruptive thinking out there, delivering a new mindset and a very specific set of revenue practices that, together, are transforming entire organizations into scalable high-performers.

These practices aren't specific to the non-profit sector. They are common among all high performing organizations, no matter their tax status.

For far too long, the non-profit sector has insulated itself. When non-profits start looking outside their space, a whole new world of opportunity – packed with the latest tools and strategies for performance and growth – opens up.

Here are eight battle-proven practices used by the most innovative, high-performing non-profits:

1. Change the Model

Discard fundraising and development all together – we prefer Investments and Partnerships. If you have a business plan (not a strategic plan) and the ability to show your SROI, you will find people are ready to give you much larger investments. This is a huge paradigm shift in itself. It requires the type of transparency, robust measurement and accountability that the very best 501c3s practice every day.

2. Ignore Overhead

If you consider fundraising staff "overhead" or even measure that number at all, you've already lost. In the best orgs, there is no such thing as overhead – all of your people should be essential to delivering your programs and services. Invest heavily in the right people, and make sure there are plenty in marketing, communication and revenue to meet your most ambitious goals.

3. Hire Fundraisers on Talent, Not Experience

Proven fundraising pros are quickly scooped up by the hospitals and universities – the 800 pound gorillas of the non-profit sector. The most successful types can make even more money in the private sector. So, if smaller orgs hire on experience, they're stuck with the leftovers and turnover suffers (The average tenure of a typical development staffer is 18 months). We prefer to start with charismatic people with great energy, communication and relationship skills, and give them intensive training and ongoing guidance. We've found people for 30-40k a year that quickly became million-dollar rainmakers for their organizations.

4. Build Relationships with Investors

Launch a continuous process of identifying, engaging, soliciting and reporting to investors in every non-profit capital market: individuals, foundations, corporations and government agencies. Launch aggressive earned income efforts, from licensing campaigns to fee-for-service. Here's where real expertise is essential. Not many can play the whole keyboard. Find some folks that have actually done it before, in multiple domains.

5. Reward Results Generously

All non-profit staff should be paid highly competitive salaries. Martyrdom is not a wise retention strategy. This is especially true of your rainmakers. Those great people we hire at low salaries? Because they raise a ton of money, they get big raises, fast, and they stay on staff, becoming happy drivers of the transformation you need. Got an org culture that only gives COLA? Adios amigos. Figure out how to raise the large investments, and then drive a good chunk of that revenue back into your people.

6. Measure What's Important

At the head of the list is the No. 1 driver of revenue performance – the number of face-to-face meetings with current and prospective investors. Our successful clients measure it every two weeks with focus, discipline and enthusiasm. Read the Stephen R. Covey's "4 Disciplines of Execution" for a great primer on the subject.

7. Create Team Play

The Board and ED should have specific investment and partnership roles and activity requirements. Most orgs we work with ask all of their board members to drive one contact per month to their investment and partnerships team. All strategies and results are shared with staff with perfect transparency. Investments and partnership people suffocate in a silo.

8. Don't Try to Raise Money

Yes, that's correct. If you try to raise money, you'll likely tank. If you try to become the highest performing, most effective organization in the world, people will come flocking to support you. Focus on performance, not money – and then, when you do put in place an effective investment and partnership operation, it can take you to the moon. And from there, you can save the world.

Donald Summers, founder and managing director of Altruist Partners LLC, is a speaker, author, social entrepreneur and management consultant with a long track record of catalyzing dramatic gains in impact, growth and performance. His clients influence state, federal and international laws and regulations, and are regularly featured in major media outlets such as The New York Times and "60 Minutes." In addition, his essays, articles and commentary have been published by the American Academy of Arts and Sciences, the Chronicle of Higher Education and Harvard Magazine.